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on Insurance Economics |
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Issue of 2008‒04‒12
eight papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Grant, Charles; Koulovatianos, Christos; Michaelides, Alexander; Padula, Mario |
| Abstract: | Marginal income taxes may have an insurance effect by decreasing the effective fluctuations of after-tax individual income. By compressing the idiosyncratic component of personal income fluctuations, higher marginal taxes should be negatively correlated with the dispersion of consumption across households, a necessary implication of an insurance effect of taxation. Our study empirically examines this negative correlation, exploiting the ample variation of state taxes across US states. We show that taxes are negatively correlated with the consumption dispersion of the within-state distribution of non-durable consumption and that this correlation is robust. |
| Keywords: | Consumption Insurance; Tax Distortions; Undiversifiable Earnings Risk |
| JEL: | E21 H20 H31 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6710&r=ias |
| By: | Melissa Boyle (Department of Economics, College of the Holy Cross) |
| Abstract: | This study tests the impact of a public prescription benefit on Medicare-eligible veterans, utilizing a mid-1990s benefit change in the VA health care system. Using data from the Medicare Current Beneficiary Survey, I compare prescription spending and utilization, as well as use of other health services and health outcomes for veterans and non-veterans before and after the VA insurance change. Results show that receipt of a publicly-provided prescription benefit leads to an increase in spending on prescriptions, and simultaneously, a decrease in spending on other medical services. On average, every $1 increase in drug spending is associated with a $6.50 decrease in other medical spending, and this change is accompanied by measured improvements in the health of benefit recipients. The benefit appears to accrue mainly to low-income and disabled individuals who typically have higher-than-average medical expenses, and are also more likely to experience substantial welfare gains from the relative income increase associated with the reduction (to zero) in the price of prescription drugs. |
| Keywords: | Medicare, prescription drugs, elderly, veteran, VA healthcare |
| JEL: | I1 H51 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:0803&r=ias |
| By: | Erik Schokkaert; Konstantin Beck; Amir Shmueli; Wynand Van De Ven; Carine Van De Voorde; Jürgen Wasem |
| Abstract: | The main objective of risk adjustment in systems of regulated competition on health insurance markets is the removal of incentives for undesirable risk selection. We introduce a simple conceptual framework to clarify how the definition of "acceptable costs" and the distinction between legitimate and illegitimate risk adjusters imply difficult ethical trade-offs between equity, avoidance of undesirable risk selection and cost-effectiveness. Focusing on the situation in Belgium, Germany, Israel, the Netherlands and Switzerland, we show how differences in the importance attached to solidarity and in the beliefs about market efficiency, have led to different decisions with respect to the definition of the basic benefits package, the choice of risk-adjusters, the possibilities of managed care, the degree of consumer choice and the relative importance of income-related financing sources in the overall system. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0619&r=ias |
| By: | Jonas Schreyögg; Markus M. Grabka |
| Abstract: | In response to increasing health expenditures and a high number of physician visits, the German government introduced a copayment for ambulatory care in 2004 for individuals with statutory health insurance (SHI). Because persons with private insurance were exempt from the copayments, this health care reform can be regarded as a natural experiment. We used a difference-in-difference approach to examine whether the new copayment effectively reduced the overall demand for physician visits and to explore whether it acted as a deterrent to vulnerable groups, such as those with low income or chronic conditions. We found that there was no significant reduction in the number of physician visits among SHI members compared to our control group. At the same time, we did not observe a deterrent effect among vulnerable individuals. Thus, the copayment has failed to reduce the demand for physician visits. It is likely that this result is due to the design of the copayment scheme, as the copayment is low and is paid only for the first physician visit per quarter. |
| Keywords: | Copayments, ambulatory care, difference-in-difference, count data, zeroinflated-model, SOEP |
| JEL: | C13 I18 L31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp96&r=ias |
| By: | Jonas Schreyögg; Markus M. Grabka |
| Abstract: | In response to increasing health expenditures and a high number of physician visits, the German government introduced a copayment for ambulatory care in 2004 for individuals with statutory health insurance (SHI). Because persons with private insurance were exempt from the copayments, this health care reform can be regarded as a natural experiment. We used a difference-in-difference approach to examine whether the new copayment effectively reduced the overall demand for physician visits and to explore whether it acted as a deterrent to vulnerable groups, such as those with low income or chronic conditions. We found that there was no significant reduction in the number of physician visits among SHI members compared to our control group. At the same time, we did not observe a deterrent effect among vulnerable individuals. Thus, the copayment has failed to reduce the demand for physician visits. It is likely that this result is due to the design of the copayment scheme, as the copayment is low and is paid only for the first physician visit per quarter. |
| Keywords: | copayments, ambulatory care, difference-in-difference, count data, zero-inflated-model |
| JEL: | C13 I18 L31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp777&r=ias |
| By: | Micklewright, John; Nagy, Gyula |
| Abstract: | The administration of benefits is a relatively neglected aspect of the analysis of disincentive effects of unemployment benefit systems. We investigate this issue with a field experiment in Hungary involving random assignment of benefit claimants to treatment and control groups, a method of policy evaluation that is still rare in Europe. Treatment, involving a tightening of claim administration, has quite a large effect on durations on benefit of women aged 30 and over, while we find no effect for younger women or men. |
| Keywords: | field experiment; Hungary; job search; unemployment insurance |
| JEL: | J64 J65 P23 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6711&r=ias |
| By: | Ian McCarthy (Indiana University Bloomington); Rusty Tchernis (Indiana University Bloomington) |
| Abstract: | There is increasing evidence suggesting that Medicare beneficiaries do not make fully informed decisions when choosing among alternative Medicare health plans. To the extent that deciphering the intricacies of alternative plans consumes time and money, the Medicare health plan market is one in which search costs may play an important role. To account for this, we split beneficiaries into two groups--those who are informed and those who are uninformed. If uninformed, beneficiaries only use a subset of covariates to compute their maximum utilities, and if informed, they use the full set of variables considered. In a Bayesian framework with Markov Chain Monte Carlo (MCMC) methods, we estimate search cost coefficients based on the minimum and maximum statistics of the search cost distribution, incorporating both horizontal differentiation and information heterogeneities across eligibles. Our results suggest that, conditional on being uninformed, older, higher income beneficiaries with lower self-reported health status are more likely to utilize easier access to information. |
| Keywords: | Search, Medicare Health Plan Choice, Discrete Choice Models, Bayesian Methods |
| JEL: | C11 C21 D21 D43 M31 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2008-004&r=ias |
| By: | Bovenberg, A Lans; Teulings, Coen N |
| Abstract: | We argue in favour of the shareholder model of the firm for three main reasons. First, serving multiple stakeholders leads to ill-defined property rights. What sounds like a fair compromise between stakeholders can easily evolve in a permanent struggle about the ultimate goal of the company. Second, giving workers a claim on the surplus of the firm raises the cost of capital for investments in jobs. Third, making shareholders the ultimate owner of the firm provides the best possible diversification of firm-specific risks. Diversification of firm-specific risk on capital markets is an efficient form of social insurance. Hence, firms should bear the full cost of specific investment, while workers should be paid only their outside option. Empirical results for Denmark, Portugal and the United States show that Denmark is closest to the first-best outcome, while Portugal and the United States deviate in different ways. Coordination in wage bargaining and collective norms help reduce the claim of workers on the firm’s surplus. Collective action, however, is a mixed blessing because politicians also face the temptation to please incumbent workers with short-run gains at the expense of exposing workers to firm-specific risks and reducing job creation. The transition from the Rhineland towards the shareholder model is fraught with difficulties. While society reaps long-run gains in efficiency, in the short run a generation of insiders has to give up their rights. |
| Keywords: | Corporate Governance; Employment Protection; Optimal Risk Sharing; Wage setting |
| JEL: | E24 G32 G34 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6645&r=ias |